MGM Resorts International (MGM) Up on Better than Expected 2nd Quarter Earnings

Shares of Las Vegas, Nevada, based MGM Resorts International (MGM) rose on Tuesday, against the backrop of a mildly lower day in stocks overall. MGM's stock was up 9.57%, rising $1.90 per share, to close at $21.75, on volume of 33,553,316 shares. The company reported both earnings and revenues for the second quarter that exceeded analysts expectations by a wide margin. MGM's CEO also announced plans to boost the company's stock price.

Founded in 1986 by Kerkor Kerkorian, MGM Resorts International is a holding company that is engaged in the ownership and operation of casino resorts that offer gaming, hotel, convention, dining, entertainment, retail and other resort amenities.

The company operates several resorts in Las Vegas and other locations in Nevada, as well as Detroit, and Biloxi and Tunica, Mississippi. It's MGM China segment owns MGM Grand Paradise, the Macau company that owns the MGM Macau, and is in the process of developing a gaming resort in Cotai. The company's stock trades on the NYSE.

On Tuesday, MGM reported that earnings for its second quarter ended on June 30 came in at $0.19 per share, compared to analysts expectations of $0.11 per share. Meanwhile, sales were reported at $2.39 billion, down by 7.6% but also better than analysts expectations. Net revenues at MGM’s wholly owned domestic resorts was $1.7 billion, or 4% higher than the same quarter of 2014. Revenue at MGM China was reported at $557 million, representing a 33% decline compared to the same quarter a year earlier. The decline in sales in China reflects general economic weakness in that country.

The company also announced its "Profit Growth Plan" on Tuesday. It is a plan for sustained growth, as well as margin enhancement. The plan's initiatives are centered on improvingthe business process through optimizing the company's scale for greater efficiency and lowercost throughout the business, and on driving revenue generation, which identifies "areas of opportunity to organically drive incremental revenue growth."

The Profit Growth Plan is expected to result in $300 million of annualized Adjusted EBITDA benefit. The plan began in July and is expected to begin producing results as early as the second half of this year, and to be fully realized by the end of 2017.

"We are continuing to drive increased profits at MGM Resorts with second quarter wholly owned Adjusted Property EBITDA up 11% driven by growth at our Las Vegas and regional resorts. These resorts are continuing to gain operating momentum while we continue to make significant progress on our development pipeline in Cotai, Maryland, and Massachusetts," said Jim Murren, Chairman & CEO of MGM Resorts International. "We are focused on positioning the Company for future growth, and are pleased to announce the implementation of our Profit Growth Plan to further enhance our business practices and profitability."

The company also expects to decide by year end if it will transfer its resort casinos into a real estate investment trust (REIT). MGM is being pushed by Land & Building Investment Management LLC to either sell the casinos or spin the resort properties into a REIT.